Japan is likely to nominate Kazuo Ueda as Bank of Japan Governor next week, according to multiple local media reports.
(Bloomberg) — Japan is likely to nominate Kazuo Ueda as Bank of Japan Governor next week, according to multiple local media reports.
The reported choice comes as a surprise, given the lack of Ueda’s name in economist polls of likely candidates for the central bank’s top position. Analysts say that the academic is a realist who may not necessarily signal a sudden shift in policy.
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Ueda, 71, a professor at Kyoritsu Women’s University, was a BOJ board member from 1998-2005 when the central bank introduced a zero interest rate policy for the first time and embarked on quantitative easing.
Here are some of his recent comments from a column he wrote in the Nikkei newspaper in July that give some insight into his policy views:
On Exits
“The BOJ needs to have an exit strategy. In the past the Federal Reserve in the 1950s and the Reserve Bank of Australia in 2021 exited from mid to long term yield control, but in both cases they did it with one adjustment.”
On Caution
“We need to pay attention to the fact that the current extraordinary monetary easing structure is one that’s not suited for small adjustments.”
“If the policy is adjusted slightly toward normalization because of a slight rise in prices, it becomes a kind of breach of promise. That cost will be paid through a major lowering of easing impact due to a lack of trust in the central bank, if there’s a mistake in the outlook and policy has to be switched back toward an easing direction.”
On a Review
“Either way, there’ll need to be a serious look into the future of the monetary easing structure at some point, after the extraordinary measures have gone on for much longer than many people thought.”
On Inflation
“From here on, with the restarting of economic activity post-Covid, there are expectations that there’ll be a stronger demand-inducing effect from the weaker yen. On the other hand, globally there’s likely to be a slowdown of inflation and economic growth. We should view the path toward achieving sustainable 2% inflation in Japan as still a long one.”
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